Qualifying employee hired on Jan. 2, 2014, by a qualifying employer in a qualifying location and the pay is $28 per hour and the employee works the maximum hours of 2,000 for the year.

The credit calculation would be as follows:

$28 — $12 = $16

$16 * 2,000= $32,000

$32,000 * 0.35 = $11,200 tax credit.

Source: California Governor’s Office of Business and Economic Development

Steve Johnston visits four halfway houses in the South Bay anytime he needs new workers for his National City ship repair company.

He has no shortage of applicants for jobs with YYK Enterprises, which hires with a starting pay of $9.50 an hour.

“Word spreads like crazy,” Johnston said.

Johnston’s business qualifies for a state tax credit on wages of up to $12 per hour, called an enterprise zone credit. Last year, his company of about 260 employees saved about $360,000 on the breaks.

“They’ve come back to real savings to the business, which allows us to invest in more equipment, which allows us to do more work, which allows us to hire more people off the unemployment rolls,” Johnston said.

But on Jan. 1, if Johnston still wants to get a tax credit from the state for jobs such as blasting away rusted steel, painting ships or placing landing strips on aircraft carriers, he’ll have to boost his entry-level salary to more than $12 per hour. That’s because last week, the state Legislature approved a bill that would eliminate the roughly 25-year-old enterprise zone program and replace it with $750 million of new tax incentives, some across the state.

Nobody says businesses in the enterprise zones are going to shut down without the low-income credit, but they may feel a little pinched.

That worries South County officials, such as Chula Vista Mayor Cheryl Cox, whose city had 7.9 percent unemployment in May. Cox said the enterprise zone credits created 1,400 jobs in Chula Vista last year. She said anyone would like to have a better paying job, but losing the current benefit could hurt the people who just need a chance.

“In many cases you have to start somewhere, and for some people the enterprise zone gave them that first foot in the door,” she said. “I think the state sometimes does the kinds of things that are considered at the state level to be a fix or a cure, but I’m looking at this and thinking this was perhaps considered a fix that I’m not sure needed fixing.”

Income tax credit

There are currently 42 enterprise zones across California, drawn and expanded by public officials to help create jobs in disadvantaged areas.

The San Diego enterprise zone, which originated in 1986, is mainly composed of areas in National City, Chula Vista and parts of south and east San Diego. It provides credits on wages of up to $12 per hour, and allows businesses to claim sales tax paid on manufacturing equipment as an income tax credit at the end of the year. The region’s enterprise zone has expanded over the years to include pockets of North County to provide incentives to companies like Soitec, a solar panel manufacturer that chose Rancho Bernardo over areas in other states for a major plant.